By Neil Halligan
From the high octane world of fast cars and the smell of burning rubber, to the choppy waters of America’s Cup, former McLaren boss Martin Whitmarsh has made the unlikely switch from Formula One racing to running new sailing team Land Rover BAR. He talks about the business of sailing and why the tide is turning for the historical sport
The America’s Cup, classed by many as sailing’s answer to Formula One (F1), has the ability to match its faster, more fashionable counterpart in the popularity stakes. But in order to garner the type of global support that has transformed F1 into a multi-billion-dollar sport, there are some important changes to be made.
Martin Whitmarsh, former boss of the McLaren F1 team, left the UK-based racing outfit in rude health after 25 years. Over 100 Grand Prix wins and eight world championships during his time with the team, Whitmarsh says he guided it from a company that had a turnover of $129m to a $1bn business.
Changing tack, and format, Whitmarsh has opted for racing of a different speed, as CEO of sailing team Land Rover BAR (Ben Ainslie Racing), which is competing in the qualifying series for the 2017 America’s Cup (branded the Louis Vuitton America’s Cup World Series).
The outfit is aiming to become the first British team to win the coveted trophy in its 165-year history, not an easy feat.
The winner of the two-year long 2017 Louis Vuitton Cup will face off against America’s Cup defenders Oracle Team USA. The teams face a series of regattas held at different venues around the world – the most recent of which was in Muscat.
Speaking in Oman, Whitmarsh says he hopes to help transform the America’s Cup entirely, generating more spectator interest and revenue, thereby shifting the competition away from the current ‘billionaire benefactor’ model that has thus far kept the competition afloat.
Appointed as CEO 12 months ago, following a call from the most successful sailor in Olympic history, Ben Ainslie, Whitmarsh says the challenge was too tempting to turn down.
“I realised there was an opportunity to do something here because I think the America’s Cup is on the cusp of something big in terms of it becoming a great sporting product and being able to create value,” Whitmarsh says.
These days, America’s Cup boats are 45-feet foiling catamarans capable of sailing at speeds in the region of 35 knots (65kph) – made all the more faster and impressive when the blade-like attachments raise the hulls and allow the boats to move with minimum surface contact.
Foiling came to prominence during the 2013 America’s Cup in San Francisco, when Team Oracle USA (owned by US billionaire Larry Ellison) used it to complete one of the greatest comebacks in sporting history, from 8-1 down, to win 9-8 against Emirates Team New Zealand.
On board Team Oracle’s boat as tactician that day was Ben Ainslie, who now hopes to guide his own team to success.
With the spectacular backdrops of the Golden Gate Bridge and Alcatraz Island, Whitmarsh says he can clearly identify an opportunity in the competition to promote it to a wider audience and grow the sport.
“Live sporting content has got massive value. Viewing from afar and viewing what happened in San Francisco [the 2013 America’s Cup final] where suddenly you had dynamic, fast-moving boats, you had fantastic technology, [sailing] became a tele-visual product and this was because of the speed and dynamics of the boats, but also because of the computer graphics on the screen,” he recalls.
“You need that in this sport. All of the boats aren’t on the same track, overtaking one another. They’re taking slightly different courses, so you need to augment that. The fact that the courses are short, they are close to shore, and you have the backdrop in the finals of hundreds of thousands of people. You need that to be atmospheric.”
The sport is not without its issues, and finding a coherent path on how it should develop has not been easy.
“The sport hasn’t historically been good at having consistency, stability and [the ability to] develop itself commercially. That’s one of the missions that we as a team and I have in the sport at the moment, to see if we can get all of the players on board with the view that we’re onto something that’s new, fresh, dynamic, exciting televisual and it’s got great value,” he adds.
And TV is where he says the real value will be for developing the sport.
“What the America’s Cup has to do, and what we’ve been preaching, is that if you want a sustainable business, and you want to grow it, first you have got to develop the value of the product, the brand, the exposure and the brand differentiation that this sailing opportunity gives. That comes by having a great show, building the number of competitors, the venues, the stability of this, and a TV audience,” he says.
History is not on his side, however. Age-old competition rules and tradition means the America’s Cup winner takes all, including the commercial rights and power over rules and regulations protocol.
Sir Russell Coutts, a New Zealand gold medal Olympic sailor and CEO of the America's Cup Event Authority (ACEA), says there has been plenty of discussion on making changes and sharing revenue streams amongst the teams.
“Each of the teams has had an opportunity to host an event themselves and they get most of the revenue from those,” he says. “There are ongoing discussions amongst the teams as to how they might set up a structure for the future, whereby they all share the funding and they underwrite it, and those that do would share in the revenues.”
Coutts says the teams are estimated to have generated revenues of about $500m over the course of the competition.
The “benevolent billionaires” have footed a large portion of the estimated $400m budgets of the current six teams.
Land Rover BAR has a three-year budget of $100m, which Whitmarsh says includes a $20m outlay on its new headquarters in Portsmouth. The team has been funded through backers including Keith Mills (known for inventing loyalty cards) and Charles Dunstone (co-founder and chairman of mobile phone retailer Carphone Warehouse), as well as commercial partners.
The top team, Oracle, has a budget that CEO Russel Coutts says is “around $80m", while three of the teams - Softbank Team Japan, Emirates Team New Zealand and Groupama Team France - have budgets estimated at $50m each.
Ainslie says starting a team from scratch, as they did in late 2013, is expensive because of the components required to build a base, as well as technical partnerships and design tools.
“It takes a lot of time and effort to catch up with the existing teams,” Ainslie says.
“What we’re working on now with the other teams is for the future. Let’s work together to all agree on a structure on the size of the boat, the schedule of racing which we think will very much reduce costs down the line and increase the commercial attraction for partners to get involved with the sport, to grow the TV product with continuity.
A possible franchise model, says Whitmarsh, should attract more teams from around the world, including one from the Middle East.
“That’s one of the reasons we’re here [in Oman],” he says. “This is not home territory for any of the teams. One of the reasons we wanted to be in this region was that one or two in this area would be a candidate for a team.”
Countries such as Spain, Italy, Germany, Switzerland, China and Russia are also possibilities, based on the broad plan to have a global appeal for the competition.
“To be a world sport, you’ve got to have, broadly speaking, probably a third European teams, a third from the Americas and a third from Asia, and in amongst that you’d expect at least one Middle Eastern team,” he says.
While there has been interest from the region – Ras Al Khaimah was prevented from hosting the event in 2009 - Coutts expects a team from the region to be taking part when the new competition starts.
“I think it's quite likely [that a new Middle East team will be in the 2019 competition], particularly if the format stays similar to what it is today. There has been several of the Middle Eastern countries that have expressed a strong interest in competing. Obviously, you'd look at the competition in the Volvo Around the World Race and there's some obvious candidates there,” Coutts says.
Oman had been considered a possibility, but Oman Sail CEO David Graham says recent changes in the country’s economic circumstances have put those plans on hold.
“My vision is that we would have a boat here as well. I was in dialogue, but as you know the oil price went ‘bang’ and that put a stop to any sort of new projects, unfortunately,” Graham says.
“I really applaud what they are doing with the America’s Cup. The cost of entry has come right down. It’s not beyond the realms of possibility that Oman will have a boat in [the competition] in the future.”
Despite the light winds in the region, Graham says Oman was the ideal choice for a winter venue.
“We make sure that the investment in any event we do is going to work for the country. So it was a business decision that did it,” Graham explains. “We looked at the cost of what is to host it and what we’d get from the conomic impact.”
He estimated that hosting the America’s Cup brought a return of between $20-26m for Oman, which should be encouraging for any other host venue in the region, should it move away from Muscat.
Whitmarsh reveals that there are talks about bringing the America’s Cup series back to the region, possibly the UAE, in a year’s time.
“We may well be coming back again. They are still talking about first quarter next year ... whipping over to maybe Abu Dhabi or some other [venue in GCC]. We’ve got to do what we’ve never done before. If you’ve got a product, you’ve got to grow, develop it and sell it and we haven’t done that,” he says.
Coutts says the ACEA sent information to 17 possible venues around the world to submit bids, but no decision has been made as yet. Wherever the winds take the sport, it seems sailing is off to a clean start in the Middle East and is set for an interesting race.